MARC has affirmed its AAAIS and AAA ratings on Cagamas MBS Berhad’s (Cagamas MBS) asset-backed Sukuk Musyarakah issuances (CMBS 2007-1-i) and fixed rate serial bonds issuances (CMBS 2005-2; CMBS 2007-2). The outlook on all ratings is stable.
Cagamas MBS is a wholly-owned special purpose vehicle of Cagamas Holdings Berhad and was established to undertake the securitisation of conventional and Islamic home financing originated by the Malaysian government. The affirmed ratings and outlook reflect the very strong credit enhancement levels and very low default risk of the collateral pools as they are underpinned by a mortgage payment mechanism which involves the deduction of monthly salaries or pensions of government servants.
CMBS 2007-1-i is backed by a pool of government staff Islamic home financing while CMBS 2005-2 and CMBS 2007-2 are backed by a pool of government staff housing loans. The performance of the collateral pools has remained strong, supported by the historically low cumulative default rates of the initial pool balances. For CMBS 2007-1-i, its repayment of the next tranche of RM320.0 million is on May 27, 2022 whereas for CMBS 2005-2, its next and final redemption of RM265.0 million is due on December 12, 2025. For CMBS 2007-2, the next redemption of RM250.0 million is due on August 22, 2022. The rating agency notes that each the of three portfolios has a healthy liquidity position to meet its respective repayment.